Conflict in APRA super figures

Members of industry superannuation funds and retail superannuation funds have balances similar in size, says the prudential regulator, seemingly undermining the assumption that members of retail funds are wealthier than their industry fund counterparts.

This could be because the analysis does not reflect the impact of rollover funds on the balances of retail fund members. Retail funds typically impose higher fees on members than industry funds, fostering the perception that low-income earners are more likely to open industry fund accounts.

Figures from the Australian Prudential Regulation Authority show the average balance of an industry fund member is $19,600. The average retail fund member’s balance is $20,200. However, the Association of Superannuation Funds of Australia said this was inconsistent with trends it had observed over a long period.

APRA chief executive
Pauline Vamos
said the way it grouped the retail sector included all eligible rollover funds, which collect the balances of small and lost accounts. Under APRA’s methodology, their balances are combined with retail funds, thereby dragging down the average balance of a retail fund member.

AFR
AFR

“The average account balance in an eligible rollover fund is under $1000 so that brings the average way, way down," Ms Vamos said. “They also include personal super which again has, on average, small balances. That’s the problem, you’re not comparing apples with apples. There isn’t enough data [from] APRA to be able to pull out the eligible rollover funds and personal super."

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If the balances were omitted, the average balance of a retail member would rise substantially, she said.

“What’s happened in the last 12 months, which would have impacted on these figures is this: one is that you’ve had a lot of account consolidation," Ms Vamos said, having observed the trend in all sectors.

“Particularly in the not-for-profit, there has been a very strong effort to get people to consolidate their accounts and that will again start raising the average account balance.

“Also, with the cost of member protection, more and more funds have transferred very low balances into eligible rollover funds as well. That would all impact on these average account balances."

Self-managed super funds have the highest average balances and easily dwarf all other types of funds because high net-worth individuals generally pursue their own retirement strategies. Self-managed funds regulated by the Tax Office reported the average balance as $479,400.

According to the Australian Bureau of Statistics, the mean super balance of a male is $87,600 and of a female, $52,300.

“That bears no resemblance to what is in [the APRA figures]," Ms Vamos said.

There is a further factor skewing the accuracy of the average balances.

The public sector and corporate funds are wedged between retail and industry at the bottom end of the scale, and self-managed funds at the top.

This is because public sector and corporate funds are usually the providers of defined benefit retirement income.